How to avoid the costly attrition of your best staff: UPS delivers a solution

19 September 2017:

Unplanned attrition – the sudden departure of key sales staff – is a major headache for the sales industry. It is a topic that has risen again and again in our conversations with sales leaders, writes Andrew Hough, CEO of the Association of Professional Sales.

The statistics, set out in a recent CSO Insights report, are stark: across Europe, on average 12% of the sales force quit unexpectedly each year, either to further their career with other employers in the same sector or to take up other sales roles.

Employers cannot foresee who in their sales force will hand in their notice, and as such can only respond reactively once a resignation letter is received. It then takes time to find, shortlist, interview, negotiate and then bring in a suitable replacement.  The process can take at least three months.

CSO Insights also reports that, through productivity and sales operations programmes, most organisations identify under-performing sales people who can’t be coached to success, or have closed learning styles – and by an interesting coincidence that figure is also 12%.

Volker Roessler, head of UPS sales training Europe, warns of the costs of unexpected attrition

Volker Roessler, Head of UPS Sales Training Europe

The problems of staff churn and lost productivity have occupied Volker Roessler, Head of UPS Sales Training Europe, for over a decade. His hard work and vision on the issue have led to UPS adopting a ground-breaking new approach.

At the Association of Professional Sales conference in partnership with CVI, Volker described how the cost of unplanned attrition in any sales force was often under-appreciated, yet frequently represented a significant proportion of sales cost and lost revenue – as shown by the CSO Insights research.

When I interviewed him after the conference to gain further professional insights on this vexed issue, Volker pointed out that while it may take three months to hire and on-board someone, the time taken for the new hire to reach full productivity is often four times that.

It emerged during our discussion that in the UK and northern Europe the problem of unexpected attrition is even more acute and challenging.

“The figure of 12% is generally an average in Europe,” Volker agrees, “but the numbers actually differ strongly between North and South Europe.

“In Southern European countries like Italy, Portugal and Spain as examples, attrition is a lot lower.”

Volker sees this lower attrition rate as both good and bad. Good, in that it reduces costs to companies, and can add stability and continuity in internal teams, and external relationships with customers; but bad, in that it stops outside experience and innovation coming into the team.

“Without an element of turnover you lose fresh ideas and external experience, which can bring new aspects to the business and improve performance,” says Volker.

He identifies the driver for the low attrition rates in southern European countries as higher unemployment, with sales people – like all workers – seeing any contract as security.

By contrast in northern Europe, which includes the UK, the unplanned attrition rate is higher and there is greater mobility. This is driven by higher employment levels, investment in company operations and hence sales skills requirements, and foreign company centres of operation.

Raising pay is not a panacea for the problem, Volker maintains. He says that in his experience, money is not the main reason for leaving, particularly when examining the data by demographics.

“The millennial demographic often aren’t focused on money, but on progression and new experience, and that can’t be driven by traditional reward plans and management systems,” he says.

Frustration – with corporate constraints on development, with lack of feedback on how to improve, and lack of management support – can also be a significant reason for staff to quit. “People join companies, yet often leave managers,” says Volker, echoing a well-known adage.

“New hires coming into most businesses have a high risk of leaving in the first year, dropping as a risk in the second year, and so on in year three.”

Volker also identifies a mindset where ambitious staff may view their current employer as merely a means to an end.

“The challenge for a lot of companies is that people look for a great brand to use on their CV, to make progress towards their desired destination. UPS is a good example of a stepping stone to other brands that the individual actually aspires to a destination,” continues Volker.

UPS, like many companies, may attract people via its strong brand, but it also loses people for the same reasons as most other global leading brands.

“There is a cultural, managerial and development fit to consider. It is up to the corporation to engage, protect, coach, invest in and develop new hires, such that even though they don’t originally feel that the company is the ‘ideal’, they come to appreciate that they are actually being coached, developed and cared for.”

Volker first became interested in this situation and how it may be resolved ten years ago, and in wrestling with its complexities he has come up with an answer. He has explored this with UPS to the point where the corporation asked him to develop a sales academy programme.

The aim of the programme was to find an innovative and progressive way to address the issue, and thus not only to minimise the costs of staff attrition, but also to build a culture of talent development within UPS.

The academy scheme started in March 2016, and is intended to protect, develop and nurture new hires in a more consistent way.

One of the most positive outcomes is that it is building an internal pool of talent that backfills for people who leave. It has dramatically reduced costs to UPS and increased sales sustainability, and given new hires in sales a more structured career and development path.

Volker estimates that in total, the knock-on costs of an unplanned sales departure can be in the order of £100,000, a sum he calls the ‘proficiency cost’.

In UK and Germany it takes at least 3-4 months to hire your preferred salesperson, followed by a further 3-4 months to bring in product knowledge and reach productivity. In Volker’s view, it takes at least a year for recruits to become fully productive. He estimates that in his experience the first three months of a salesperson’s tenure see zero revenue. From three to six months he estimates that around 20% of desired productivity is deliverable, and that in the period from six to 12 months there is a curve (often variable) to 100%. It is part of the challenge that, however the curve flows, new hires are paid from day one at full package.

The concept came from Volker’s experience running inside sales in Germany for UPS, where, despite the challenges and non-ideal connection between inside sales and field sales, he used his experience and fed the field with prepared UPS sales people to limit the impact of unplanned sales departure. His vision was both clear and early.

UPS chose to start the academy programme in Germany and the UK, where there were stronger employee numbers and revenue. The programme is now established in four countries and being rolled out further afield.

In smaller countries they combine the roles of the academy coach and field sales coach, taking away development coaching from sales managers, in an effort to ensure that each salesperson’s individual development needs are focused upon.

The goal for the coaches is the development of the people, and that leaves sales leaders clear to focus on numbers.

The academy aims to pass skills and knowledge to new UPS sellers. It embraces the next generation, setting the tone for managers in UPS to care for their sales colleagues. Leaders are rewarded for reducing attrition and for the promotion of academy graduates.

To balance this they also don’t place the academy people on a “sales region”, so they are not distracted in their learning.

It is a clear that a considerable amount of thought and passion has gone into the programme. Through innovation, UPS in Europe has looked at self-development programmes to reduce the often under-appreciated cost of attrition.

I asked Volker how the academy had been received. “Initially people were sceptical whether this programme would survive, and others weren’t convinced how it fitted into their hiring and development programmes,” he admits.

Proofs of the academy’s success lie in how perception of new hires has changed, and in the recruits’ positive experience of the on-boarding process and their academy journey. It is notable that academy graduates are attracting people to UPS based on their feedback.

The UPS academy looks like an excellent example of innovation and focus on skills development paying off. But it takes a leader and a visionary to have understood that a sales academy could actually reduce what is a significant cost and disruption to a sales organisation.

As people graduate from the academy they are ready to fill sales positions in UPS, and because they have been through an academy and learnt sales skills, practiced situations and shadowed more experienced sellers, and they fully understand the UPS offering and methodologies, they are fully productive as soon as they start customer relationships.

Applying Volker’s rationale to the spectrum of UK business, it seems apparent that large companies and global brands are better placed to sustain the costs of unplanned attrition. By comparison, SMBs are potentially more vulnerable to this cost of sales, and it is important for them to minimise it where possible.

The UPS model has successfully reduced the costs of attrition and provided more stable relationships, but it has taken time to achieve. Not many companies, if any, will be able to get such an academy active and effective for some years.

That’s where the Association of Professional Sales can help: by providing mechanisms for corporations to work with their sales people to give them an academy experience, including external learning and development. The APS can assist corporations in retaining their high potential sellers, and in attracting other quality candidates.

But our role is also to celebrate best practice, and to help promote organisations who are doing wonderful things in the area of sales professionalism, and individuals who have worked hard to impact the profession.

Biography: Volker Roessler

Volker started with UPS 26 years ago as a Service Provider in Operations. After one year he moved to Business Development, starting his sales career. He held a succession of positions in sales, including Account Executive, Key Account Management, Area Sales Manager and Inside Sales Manager. In 2005, Volker moved to Sales Operations, covering areas such as Customer Automation, Sales Support, Customer Support, Sales Compensation, Special Contracts, and Lead Qualification. He later moved to the Europe Region Headquarters covering Sales Operations and Sales Strategy for Europe, and is today responsible for Sales Training and the UPS Sales Academy in Europe.

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